Educating military families about the pitfalls of expensive, low-quality, for-profit colleges is a priority for the CFPB, according to Holly K. Patraeus, Assistant Director of the CFPB’s Office of Servicemember Affairs. In testimony before the Senate Subcommittee on Federal Financial Management, Government Information, Federal Services and International Security, Patraeus explained, “There are an increasing number of for-profit colleges eager to enroll” active-duty military members and veterans as students.

For-profit colleges’ increased interest in military students relates to the “90-10 rule” of the Higher Education Act. That rule requires for-profit colleges to obtain a minimum of 10% of their funding from sources other than Title VI education funds. For-profit colleges are targeting military families, according to Patraeus, because servicemembers and veterans receive education funds from the Military Tuition Assistance program and the GI Bill, neither of which is a Title VI federal education fund. Thus, for-profit colleges may meet their 10% non-Title-VI funding quota by recruiting students who qualify for Military Tuition Assistance or the GI Bill.  

Patraeus worries that “[t]his has given some for-profit colleges an incentive to see servicemembers as nothing more than dollar signs in uniform, and to use some very unscrupulous marketing techniques to draw them in.” Some of these colleges have “questionable academic credentials” as well as “low graduation rates and a poor gainful employment history.” In addition, they have above-average student loan default rates.  

Some for-profit colleges also lure servicemembers by falsely promising that Military Tuition Assistance or the GI Bill will pay costs, according to Patraeus. Then the paperwork arrives, and “[b]efore the student knows it, he or she not only has used up military education benefits, but also is locked into a private loan that may not be the best deal – or make sense at all – for that individual.” In sum, Patraeus believes that “military communities are once again under siege by a group that sees big money to be made off the military: for-profit colleges.” To that end, “the CFPB and the Office of Servicemember Affairs are already working hard to ensure that servicemembers, who devote their lives to protecting our nation, will have a strong advocate to protect them and their families from financial threats.”